An option transaction is a right transaction. In an option transaction, the option buyer, after paying a fee, acquires the right granted by the option contract to buy or sell a certain number of underlying assets to the option seller at a predetermined price (execution price) at the time specified in the contract. .

The price of an option is called a premium. The premium is the fee paid by the option buyer to the option seller for the rights granted by the option contract. For the option buyer, regardless of where the price of the future underlying asset changes, the biggest possible loss is only the premium. This feature of the option gives the trader the ability to control the investment risk. The option seller receives the option premium from the buyer as a return on market risk.

Refers to the contract that the right party of the agreed option has the right to buy the agreed number of contracted securities from the obligor at the agreed price at the agreed time.

Put Option

Refers to the agreement that the right holder of the option has the right to sell the agreed number of contracted securities to the option obligor at the agreed price at the agreed time.

Stock option

Refers to a standardized contract that is uniformly defined by the Exchange and that provides the contract buyer with the right to buy or sell the agreed contract (stock or ETF) at the agreed price at the agreed time.

On the basis of the value of the option, the market's supply and demand relationship with the option contract determines the market price of the option, that is, the premium. From the perspective of option elements, the option price is usually affected by factors such as the underlying price, the strike price, the contract expiration date, the market risk-free rate, and the underlying securities price volatility.

The four factors affecting the price of the option, the target price, the strike price, the maturity period, and the market risk-free interest rate can all be directly observed, and the volatility can only be estimated. Different investors have different forecasts for volatility. Based on this, the calculated option prices may have large differences, and the operational judgments will be very different. In the actual situation, five factors may act simultaneously and interact with each other.

Options are a more complex and flexible investment tool. Whether it is a trend market or a volatile market, investors have the strategy to capture profit and control risk in almost all market expectations.

Options have four basic positions—the call option long, the call option short, the put option long and the put option short, plus the long and short positions of the underlying asset, which constitute the six basic positions of the basic trading strategy of the option. Each option position includes dozens of option contracts with different strike prices and different maturity dates, and subtly select the appropriate contract from which to profit from any market trend.

The profit and loss change of the option during the duration is a curve in the option price-target asset-time 3D surface. The profit and loss of the expiration date is determined. For the convenience of analysis, we often select the surface to be sliced ​​at the expiration date. The profit and loss diagram above is used for analysis. The profit and loss of the underlying asset is relatively simple and is a straight line, while the profit and loss of the expiration date of the option position is more complicated and non-linear.

On October 10, 1997, the 29th Nobel Prize in Economics was awarded to two American scholars, Harvard Business School professor Robert Merton and Stanford University professor Myron Scholes. At the same time, he affirmed Black's outstanding contribution. The Black-Scholes Option Pricing Model, which they created and developed, is a derivative financial instrument that is priced in a market for price changes in emerging derivative financial markets, including stocks, bonds, currencies, and commodities. Reasonable pricing laid the foundation.

The application of this formula has expanded with the advancement of computers and communication technologies. To date, the model and some of its variants have been widely used by option traders, investment banks, financial managers, insurers, and others.

When stocks are selected as the subject of the contract, the average daily volatility in the past six months does not exceed three times the daily average volatility of the benchmark index.

The expiration date of the option contract is the fourth Wednesday of the expiration month, which is the national statutory holiday and the company's rest day, and is postponed to the next trading day. The last trading day and exercise date of the option contract, along with its due date.

If the subject matter of the contract is ex-dividend or ex-dividend, the company will adjust the contract unit and exercise price of all the unexpired contracts marked on the contract, and re-list the new option contract for the ex-dividend and ex-dividend contract.

Option trading implements a price increase and decrease system, and the declaration of the price exceeding the price limit is invalid. Option bidding transactions are combined on a price-first, time-first basis. During the continuous bidding trading period, the declarations made by the price limit will be combined according to the principle of closing the position and time priority.

Individual investors participating in an option transaction shall comply with the securities market capitalization and the available balance of the fund account (excluding securities and funds incorporated through margin financing and securities lending) entrusted to the entrusted option operating institution when applying for account opening, totaling not less than RMB 50. 10,000 yuan; and designated transactions in securities companies for more than 6 months and have the qualifications for financial and securities lending business or financial futures trading; or open a futures company for more than 6 months and have financial futures trading experience. At the same time, the option management institution should classify the individual investors' rights to participate in the option trading. The trading authority level applied by the individual investors is divided into first-level, second-level and third-level trading rights.

Ordinary institutional investors participating in option trading shall be in accordance with the securities market capitalization and the available balance of the fund account (excluding securities and funds incorporated through margin financing and securities lending transactions) entrusted to the entrusted option operating institution when applying for account opening, total not less than RMB 1 million.

Market-making services include: (1) providing bilateral continuous quotations to investors; b) providing bilateral quotations for investors' inquiries; and (3) other businesses as stipulated by the Exchange or the market-making agreement.

Market makers are mainly market makers and general market makers. The main market maker shall provide all market-making services as stipulated in the preceding article. Generally, market makers shall provide market-making services as stipulated in items (2) and (3) of the preceding article.

When the trading price of the option contract with the contract is stock is less than 0.005 yuan, or the trading price of the option contract with the contract-traded open-end index fund is less than 0.001 yuan, the market maker can suspend the buying price for the contract. .

Option trading implements a position limit system. The position limit includes the rights warehouse position limit of the individual contract type, the total position limit, the one-day purchase opening limit, and the total transaction amount limit corresponding to the rights warehouse held by the individual investor. The total transaction amount corresponding to the rights warehouse held by an individual investor (hereinafter referred to as the “buy amount”) shall not exceed the higher of the following amounts: (1) The market value of the securities of the option management institution entrusted by the investor 10% of the available balance of the fund account (excluding securities and funds incorporated through margin trading); (2) The investor's securities account holds 20% of the market value of the Shanghai stock market in the past 6 months.